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Penang’s RM500 million ‘affordable housing’ scam

March 20, 2012

FMT LETTER: From Calvin Sankaran, via e-mail

One can accuse Lim Guan Eng, the Penangā€™s Chief Minster, of many things but surely a lack of self-promotion canā€™t be one of these complaints. Ever since taking over the stateā€™s reins, Lim has ceaselessly and tireless hyped up his DAP-led administration as people-centric and super efficient.

As such the revelations by the Auditor General (AG) in his 2010 Report that Limā€™s administration failed to build even a single low-cost house since taking over the state government came as a huge shock to many Penangites and Malaysians.

This revelation is highly unflattering and politically devastating when compared to the previous BN governmentā€™s record of building 9,600 low cost and 6,000 medium cost houses as well as 4,800 low cost flats between 2004 and 2008. .

The CM has frequently stated his objectives of replicating the Singapore and Hong Kong models in providing affordable public housing to solve the acute shortage of such housing in the state. Lim had visited Singapore on numerous occasions and uppermost among his objectives were (supposedly) to study the Singaporeā€™s Housing Development Board (HDB) system.

However, despite all the chest-thumping and posturing nothing ever materialised out of these countless visits and studies. Instead he kept blaming the lack of an organisation similar to HDB for his failures, while conveniently omitting to mention this did not stop his predecessors from building thousands of affordable houses.

However, after being publically humiliated and laid-bare by the AGā€™s findings and assailed by the state Opposition and NGOs, Lim quickly announced communist-sounding Peopleā€™s Affordable Housing Scheme in Bandar Cassia, Batu Kawan, a location situated at the mainland and far removed from the commercial, industrial and administrative centers in the state.

He also announced, with much fanfare, an allocation of RM500 million to the ā€œAffordable Housing Fundā€ and that Penang Development Corporation (PDC) will spearhead this project. Surbana, a subsidiary of Singaporeā€™s HDB, was awarded the contract to design the township.

There is no doubt that the project itself has noble aims. However, on closer inspection the scheme reveals some disturbing facts that require urgent and full answers from the state government.

1 Lim allocated RM500 million for this project from the controversial ā€œsaleā€ of Bayan Mutiara. Can the CM explain how the money will be spent? Why there is even a need for this money when the land belongs to PDC and the construction cost will be borne by the development company that wins the tender? Does this mean the state will be financing the developer? Does this also mean that the tax payers will bear all the costs and assume all risks while the developer reaps outrageous profits at our expense?

2 For years Lim has been whining about the lack of a HDB-style body to manage the affordable housing scheme. So the question is why now the state is still using PDC as the implementing agency? Does this mean the CM mislead Penangites and wasted considerable time and resources in setting up Penang Housing Board (PHB) when the same role could be performed by an existing body, i.e., PDC or even MPPP/MPSP?

3 The ā€œaffordable housesā€ in Limā€™s Bandar Cassia are priced between RM72,000 to RM220,000. How could this ridiculous price range be considered as ā€œaffordableā€?Ā  Worse still only around 20% of these houses will be priced at RM72K while the rest will carry a much higher price tag.

The previous government built affordable houses for only RM42 to RM80k. Not only the former BN govt built cheaper homes they also constructed them at the Penang Island too. In fact for RM220k, one could even buy a condo in other states. Given that land is given free and financing is also provided by the state government, these prices look astronomical.

4 The selection of Surbana is another point which Lim has misled the public.Ā  Singaporeā€™s HDB was never an agency for developing affordable public housing but public housing in general. While it is true that HDB managed to solve the public housing in Singapore, it came with a huge social-economic cost. In fact the lack of affordability and availability of the HDB flats was one of the key factors behind PAPā€™s poor showing in the last Singaporeā€™s General Elections.

5 It also appears that Lim did not follow his own much-hyped ā€œopen tenderā€ policy in awarding the contract. Malaysian firms have won numerous awards for housing developments at regional and global levels and as such this selection is an affront to the Malaysian construction industry.

The RM6.75million paid to Surbana for the first phase of the project is also excessive and several times more than the fees usually charged by local firms. Can Lim explain the rationale behind this stratospheric fees and who has approved it?

6 The township reportedly planned to be developed over 10 to 15 years. Many industry players find it laughable that Limā€™s ā€œsuper efficientā€ government is taking 15 years to build 11,800 houses when even a medium-sized developer could build the same number of houses within a few years.

7 Viewing this issue from a macro perspective, a more disturbing picture emerges and the real intentions of the state government are unveiled. It certainly looks as though the state is creating a humongous ghetto for poor people in the state by removing them from the island and other more prosperous parts of the mainland and sending them to Penangā€™s very own Soweto.
An even more serious accusation is that the state undertaking ethic cleansing and practicing apartheid policy on poor Malays and Indians by sending them to the mainland for political purposes. There are grounds to believe the state government might want to evict the poor minorities from the island and taking over their ancestral lands to build even more super luxury homes for rich locals and foreigners. Given state governmentā€™s track records, certainly accusation of such hidden ugly racial agenda is plausible.

8 The decision of the state government to site Robert Boschā€™s highly toxic Solar Panel manufacturing plant at Batu Kawan instead of Bayan Lepas (at the Island) also becomes clearer too. It appears that the state considers the health and lives of poor people of Penang much less important than super rich Penangites and foreigners who reside at the Island.

Lim had promised Penangites a dream, best quality affordable housing but the facts show that this project will turn out to be a nightmare and a scam to enrich the private sector at the expense of public just like case of the RM10 billion Bayan Mutiara Scandal.


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